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Time to leave GDP behind

Gross domestic product is a misleading measure of national success. Countries
should act now to embrace new metrics, urge Robert Costanza and colleagues.

R
obert F. Kennedy once said that
a country’s gross domestic prod-
uct (GDP) measures “everything
except that which makes life worthwhile”.
The metric was developed in the 1930s
and 1940s amid the upheaval of the Great
Depression and global war. Even before
the United Nations began requiring coun-
tries to collect data to report national GDP,
Simon Kuznets, the metric’s chief architect,
had warned against equating its growth
with well-being.
GDP measures mainly market trans­
actions. It ignores social costs, environmental
impacts and income inequality. If a business
used GDP-style accounting, it would aim can be estimated, as can the effects of income
to maximize gross revenue — even at the inequality2. The psychology of human well-
expense of profitability, efficiency, sustain- being can now be surveyed comprehensively
ability or flexibility. That is hardly smart or and quantitatively3,4. A plethora of experi-
sustainable (think Enron). Yet since the end ments has produced alternative measures of
of the Second World War, promoting GDP progress (see Supplementary Information;
growth has remained the primary national go.nature.com/bnquxn).
policy goal in almost every country1. The chance to dethrone GDP is now
Meanwhile, researchers have become in sight. By 2015, the UN is scheduled to
much better at meas- announce the Sustainable Development
Nature.com uring what actually Goals, a set of international objectives to
For more on does make life worth- improve global well-being. Developing
sustainable while. The environ- integrated measures of progress attached
development goals: mental and social to these goals offers the global commu-
go.nature.com/ttay1n effects of GDP growth nity the opportunity to define what

1 6 J a n ua r y 2 0 1 4 | V O L 5 0 5 | N A T U R E | 2 8 3
 COMMENT
sustainable well-being means, how to
measure it and how to achieve it. Missing
this opportunity would condone growing
inequality and the continued destruction
of the natural capital on which all life on
the planet depends.
Dethroning GDP
When GDP was instituted seven decades
ago, it was a relevant signpost of progress:
increased economic activity was credited
with providing employment, income and
amenities to reduce social conflict and pre-
vent another world war.
But the world today is very different from
the one faced by the global leaders who
met to plan the post-war economy in 1944
in Bretton Woods, New Hampshire. The
emphasis on GDP in developed countries
now fuels social and environmental insta-
bility. It also blinds developing countries to
possibilities for more-sustainable models of
development.
Soaring economic activity has depleted
natural resources. Much of the generated
wealth has been unequally distributed, lead-
ing to a host of social problems5. The phi-
losopher John Stuart Mill noted more than
200 years ago that, once decent living stand-
ards were assured, human efforts should be
directed to the pursuit of social and moral
progress and the increase of leisure, not the
competitive struggle for material wealth. Or
as the economist John Kenneth Galbraith
once observed: “To furnish a barren room
is one thing. To continue to crowd in fur-
niture until the foundation buckles is quite
another.”
The limits of GDP are now clear.
Increased crime rates do not raise living
standards, but they can lift GDP by raising
expenditures on security systems. Despite
the destruction wrought by the Deepwater
Horizon oil spill in 2010 and Hurricane
Sandy in 2012, both events boosted US GDP
because they stimulated rebuilding.
Weighing the alternatives
Alternative measures of progress can be
divided into three broad groups (see Sup-
plementary Information). Those in the first
group adjust economic measures to reflect
social and environmental factors. The sec-
ond group consists of subjective measures
of well-being drawn from surveys. The third
group relies on weighted composite indica-
tors of well-being including housing, life
expectancy, leisure time and democratic
engagement.
Adjusted economic measures. These
are expressed in monetary units, making
them more readily comparable to GDP.
Such indices consider annual income, net
savings and wealth. Environmental costs
and benefits (such as destroying wetlands
or replenishing water resources) can also
2 8 4 | N A T U R E | V O L 5 0 5 | 1 6 J anuar y 2 0 1 4
be factored in. One example is the genuine
progress indicator (GPI). This metric is cal-
culated by starting with personal consump-
tion expenditures, a measure of all spending
by individuals and a major component of
GDP, and making more than 20 additions
and subtractions to account for factors such
as the value of volunteer work and the costs
of divorce, crime and pollution6.
Crucially, unlike other measures in the
first group, GPI considers income distribu-
tion. A dollar’s worth of increased income
to a poor person boosts welfare more than
a dollar’s worth of increased income does
for a rich person. And a big gap between the
richest and the poor-
“GDP is est in a country — as
dangerously in the United States
inadequate and, increasingly, in
as a measure China and India —
of quality of correlates with social
life.” problems, including
higher rates of drug
abuse, incarceration and mistrust, and
poorer physical and mental health5.
These adjustments matter. A 2013 study2
comparing the GDP per capita and the GPI
per capita of 17 countries comprising just
over half the global population found star-
tling divergences between the two metrics.
The measures were highly correlated from
1950 until about 1978, when they moved
apart as environmental and social costs
began to outweigh the benefits of increased
GDP (see ‘Genuine progress flattens’). Tell-
ingly, life satisfaction is highly correlated with
GPI per capita, but not with GDP per capita.
Some governments are taking this seri-
ously. Two US states, Vermont and Mary-
land, have in the past three years adopted
GPI as a measure of progress and have
implemented policies specifically aimed at
improving it.
Subjective measures of well-being. The
most comprehensive of these is the World
Values Survey (WVS), which covers about
70 countries and includes questions about
how satisfied people are with their lives.
Starting in 1981, the WVS is conducted
in ‘waves’, the sixth of which is currently
in progress. Another example is the gross
national happiness index used in Bhutan.
This measure uses elaborate surveys that ask
how content people feel in nine domains:
psychological well-being, standard of living,
governance, health, education, community
vitality, cultural diversity, time use and eco-
logical diversity.
Subjective well-being has been highly
studied, and has even been recommended
as the most appropriate measure of societal
progress7. But subjective indicators are tricky
to compare across societies and cultures. For
example, self-reported health tracks with
clinically reported rates of morbidity and
mortality within countries but not across
them8. And people are not always aware of
the things that contribute to their well-being.
Few of us give credit to ecosystem services
for water supply and storm protection, for
example.
Weighted composite measures of several
indicators. A comprehensive picture of sus-
tainable societal well-being should integrate
subjective and objective indicators9 (see
Supplementary Information, Figure S1), as
these measures begin to do. One example is
the Happy Planet Index, introduced by the
New Economics Foundation in 2006. This
multiplies life satisfaction by life expectancy
and divides the product by a measure of eco-
logical impact.
Other indices in the third group com-
bine a range of variables, such as income,
housing, jobs, health, civic engagement,
safety and life satisfaction. The Better Life
Index, developed by the Organisation for
Economic Co-operation and Develop-
ment, maintains a website that allows users
to choose how to weight variables, revealing
how the emphasis on different variables can
influence countries’ rankings.
Many other experiments are under way
(see www.wikiprogress.org). None of these
measures is perfect, but collectively they
offer the building blocks for something
much better than GDP.
Why are we stuck?
There is broad agreement that global society
should strive for a high quality of life that
is equitably shared and sustainable. Sev-
eral groups and reports have concluded
that GDP is dangerously inadequate as a
measure of quality of life — including those
published by the French government’s 2008
Commission on the Measurement of Eco-
nomic Performance and Social Progress10,
the Frederick S. Pardee Center for the Study
of the Longer-Range Future11 and the Euro-
pean Commission’s ongoing Beyond GDP
initiative. That conclusion was also echoed
in ‘The Future We Want’, the declaration
GENUINE PROGRESS FLATTENS
SOURCE: REF. 2
World GDP has soared since 1950, but a metric
for life satisfaction called GPI has not.
12
Gross domestic
2005 US$ (thousands) per capita
product
10
8
6
4
Genuine progress
indicator
2
0
1950 1960 1970 1980 1990 2000
Left: Izzet Keribar/IML Image Group/eyevine; Right: Abe Fox/AP
Bhutan has measured citizens’ well-being using gross national happiness since 2008 (left); GDP has been in use since the 1944 Bretton Woods meeting (right).
of the 2012 Rio+20 UN Conference on
Sustainable Development agreed to by all
UN member states.
Nonetheless, GDP remains entrenched1.
Vested interests are partly responsible. For-
mer US President Bill Clinton’s small move
towards a ‘green GDP’, which factored in
some of the environmental consequences of
growth, was killed by the coal industry. How-
ever, much of the problem is that no alterna-
tive measure stands out as a clear successor.
Creating that successor will require a sus-
tained, transdisciplinary effort to integrate
metrics and build consensus. One poten-
tial vehicle for doing this is the setting up
of the UN Sustainable Development Goals
(SDGs), a process that is now under way
to replace the Millennium Development
Goals (MDGs). Established in 2000, the
MDGs comprise eight basic targets that
include eradicating extreme poverty and
establishing universal primary education,
gender equality and environmental sustain-
ability. Currently both the MDGs and the
suggested SDGs are only lists of goals with
isolated indicators. But the SDG process can
and should be expanded to include compre-
hensive and integrated measures of sustain-
able well-being12.
If undertaken with sufficiently broad
participation, the hunt for the successor to
GDP might be completed by 2015. There are
significant barriers to doing this, including
bureaucratic inertia and the tendency of
governments, academia and other groups
to work in isolation. These barriers can be
overcome with dedicated leadership. Cru-
cially, people can now communicate across
the globe with an ease unthinkable in the
days of Bretton Woods.
Any ‘top-down’ process must be supple-
mented with a ‘bottom-up’ engagement of
civil society that includes city and regional
governments, non-governmental organi-
zations, business and other parties. We
recently formed the Alliance for Sustain-
ability and Prosperity (www.asap4all.com)
to do just that. This web-based ‘network of
networks’ can communicate research about
sustainable quality of life and the elements
that contribute to it (see Supplementary
Information), and so help to build consen-
sus among the thousands of groups now
concerned with these issues.
The successor to GDP should be a new set
of metrics that integrates current knowledge
of how ecology, economics, psychology and
sociology collectively contribute to estab-
lishing and measuring sustainable well-
being. The new metrics must garner broad
support from stakeholders in the coming
conclaves.
It is often said that what you measure is
what you get. Building the future we desire
requires that we measure what we want,
remembering that it is better to be approxi-
mately right than precisely wrong. ■
Robert Costanza and Ida Kubiszewski
are at the Crawford School of Public Policy,
Australian National University, Canberra.
Enrico Giovannini is in the Department
of Economics and Finance, University of
Rome Tor Vergata, and minister of labour
and social policies in the Italian government.
Hunter Lovins is at Natural Capital
Solutions, Longmont, Colorado. Jacqueline
McGlade is at University College London,
and the United Nations Environment
Program, Nairobi, Kenya. Kate E. Pickett
1 6 J a n u a r y 2 0 1 4 | V O L 5 0 5 | NA T UR E | 2 8 5
COMMENT
is in the Department of Health Sciences,
University of York, UK. Kristín Vala
Ragnarsdóttir is at the Institutes of Earth
Sciences and Sustainable Development
Studies, University of Iceland, Reykjavík.
Debra Roberts is in the Environmental
Planning and Climate Protection
Department, eThekwini Municipality,
Durban, South Africa. Roberto De Vogli
is at the University of California, Davis.
Richard Wilkinson is in the Division of
Epidemiology and Public Health, University
of Nottingham, UK.
e-mail: robert.costanza@anu.edu.au
1. Van den Bergh, J. C. J. M. J. Econ. Psychol. 30,
117–135 (2009).
2. Kubiszewski, I. et al. Ecol. Econ. 93, 57–68
(2013).
3. Diener, E. & Suh, E. M. in Well-Being: The
Foundations of Hedonic Psychology (eds
Kahneman, D., Diener, E. & Schwarz, N.)
434–450 (Russell Sage Foundation, 2003).
4. Seligman, M. E. P. Flourish: A Visionary New
Understanding of Happiness and Well-being
(Atria, 2012).
5. Wilkinson, R. G. & Pickett, K. The Spirit Level:
Why Greater Equality Makes Societies Stronger
(Bloomsbury, 2009).
6. Talberth, J., Cobb, C. & Slattery, N. The Genuine
Progress Indicator 2006: A Tool for Sustainable
Development (Redefining Progress, 2007).
7. Layard, R. Happiness: Lessons from a New Science
(Penguin, 2005).
8. Barford, A., Dorling, D. & Pickett, K. Social Sci.
Med. 70, 496–497 (2010).
9. Costanza, R. et al. Ecol. Econ. 61, 267–276
(2007).
10. Stiglitz, J. E., Sen, A. & Fitoussi, J.-P. Report by the
Commission on the Measurement of Economic
Performance and Social Progress Vol. 12
(Commission on the Measurement of Economic
Performance and Social Progress, 2009).
11. Costanza, R., Hart, M., Posner, S. & Talberth, J.
Beyond GDP: The Need for New Measures of
Progress (Boston University, 2009).
12. Griggs, D. et al. Nature 495, 305–307 (2013).
 SUpplementary information COMMENT
Supplementary Information to:
Time to leave GDP behind (Comment in Nature 505, 283–285; 2014)

Robert Costanza, Ida Kubiszewski, Enrico Giovannini, Hunter Lovins, Jacqueline McGlade, Kate E. Pickett,
Kristín Vala Ragnarsdóttir, Debra Roberts, Roberto De Vogli & Richard Wilkinson

Table S1. Some alternative National Indicators of Welfare and Well-Being.

Temporal
Indicator Type Units Domains Indicators Explanation Area coverage Coverage References Website
Index of Sustainable Economic Welfare Personal Consumption Expenditures weighted by income 17 countries,
(ISEW) and Genuine Progress Indicator GDP modification $ 4 26 distribution, with volunteer and household work added and several states and 1950-various 1-3 http://genuineprogress.net/
(GPI) environmental and social costs subtracted. regions
level of saving after depreciation of produced capital; investments in http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/
Income accounts
Genuine Savings
modification
$ 3 5 human capital ; depletion of minerals, energy, and forests; and 140 countries 1970-2008 4,5 ENVIRONMENT/EXTEEI/0,,contentMDK:20502388~me
nuPK:1187778~pagePK:148956~piPK:216618~theSiteP
damages from local and global air pollutants are accounted for K:408050,00.html

Capital accounts
Inclusive Wealth Index
modification
$ 4 8 Asset wealth including, built, human, and natural resources 20 countries 1990-2008 6 http://www.ihdp.unu.edu/article/iwr

http://www.deakin.edu.au/research/acqol/au
Australian Unity Well-Being Index Survey-based index Index # 14 14 Annual survey of various aspects of well-being and quality of life Australia 2001-present 7
wbi/index.php

Periodic (5 "waves" so far) survey of a broad range of variables.

1981-2008
World Values Survey Survey-based index Index # 10 100's Most used for international comparisons is ranking of "how satisfied 73 countries
intermittent 8,9 http://www.wvsevsdb.com
are you with your life?" question.
Annual survey in six domains: live evaluation, physical health,
Gallup-Healthways Well-Being Index Survey-based index Index # 6 39 emotional health, healthy behavior, work environment, and basic 50 states in US 2008-present 10 http://www.well-beingindex.com/
assets
Detailed in-person survey around nine domains: psychological well-
Gross National Happiness Survey-based index Index # 9 33 being, standard of living, governance, health, education, community Bhutan 2010 11
vitality, cultural diversity, time use, and ecological diversity

Index of GDP/person, spending on health and education, and life

Human Development Index (HDI) Composit Index Index # 3 4 177 countries 1980-present 12 http://hdr.undp.org/en/
expectancy

Happy Planet Index Composit Index Index # 3 3 HPI = subjective well being * life expectancy / ecological footprint 153 countries 3 yrs 13,14 http://www.happyplanetindex.org/

Includes community vitality, democratic engagement, education, https://uwaterloo.ca/canadian-index-

Canadian Index of Well-Being Composit Index Index # 8 80 Canada 1994-present 15
environment, population, leisure, living standards, and time use wellbeing/

proxies for built, human, natural and social capital with weights
National Well-Being Index Composit Index Index # 5 5
based on regression with subjective well-being
56 countries 1 yr 16,17

Includes housing, income, jobs community education, environment,

36 OECD
OECD Better Life Index Composit Index Index # 11 25 civic engagement, health, life satisfaction, saftey, and work-life
countries
1 yr 18,19 http://www.oecdbetterlifeindex.org
balance

http://sedac.ciesin.columbia.edu/data/set/ce
Well-Being of Nations Composit Index Index # 20 63 63 indicators in 20 domains weighted and ranked 180 countries 1990-2000 20 sic-wellbeing-of-nations

Sustainable Society Index Composit Index Index # 5 22 22 indicators in 5 domains ranked with various weightings 150 countries 2 yrs 21 http://www.ssfindex.com/

S u p p l e m e n t a r y i n f o r m a t i o n | 1 6 J a n u a r y 2 0 1 4 | NATURE | 1